"What Do You Think Of Materials?"

Good question.

Like most sectors it depends on what part of the sector you mean. I own one chemical stock for clients and it has gotten hit due to oil issues. It is down more than some but not as bad as some others. That part of the sector is reacting to something very specific that may or may not be short term. Since a lot of chemical stocks are down at the same I don’t see much reason to consider selling.

The other parts of the sector that I own for clients have helped a lot with what looks like will be a very good quarter. Here I am talking about a foreign gold stock and a Brazilian commodity company which were up 20% and 50% respectively for the quarter. While those moves may seem like a lot, the truth is I have owned them for ages and every now that they have their day in the sun.

Part of having a diversified portfolio means that there is always something working. Well, almost always:-)

I also own Plum Creek Timber which is unchanged for the quarter but it paid $0.38 in dividends this quarter.

3 Comments

  1. Paper; pricing has been the major issue here. Can’t keep up with rising gas / chemical costs. IP is an interesting play in my opinion though. The restructuring is getting zero respect from the street and their timberlands could be worth $16 / share alone.

    Steel; China is the wildcard here. They keep boosing capacity. Long term, I think the industry is in trouble as China becomes a net exporter and pricing will fall. It already has cratered from peak levels last year, although still not at long term median levels.

    Commodity Chemicals; Best pick of the group in my opinion. Pricing should remain strong (as long as demand stays stable) as their is a supply / demand inbalance and major new capacity is being pushed out to ’07 / ’08. DOW could be the play. Ethylene pricing is going to remain strong, especially after 15% of capacity came off line following Katrina. Supply remains tight.

    Reply
  2. Roger,
    What do you think of BF? An efficient producer with a small oil interest. Plus it’s foreign with a dividend.
    Jim in LV

    Reply

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